Crooks, In re, S014373

• Decision Date: 06 December 1990
• Docket Number: No. S014373,S014373
• Citation: 275 Cal.Rptr. 420,51 Cal.3d 1090
• Court: California Supreme Court
• Parties: , 800 P.2d 898 In re John Elbert CROOKS on Disbarment.

Page 420

275 Cal.Rptr. 420

51 Cal.3d 1090, 800 P.2d 898

In re John Elbert CROOKS on Disbarment.

No. S014373.

Supreme Court of California,

In Bank.

Dec. 6, 1990.

[51 Cal.3d 1092] [800 P.2d 899] John E. Crooks, Tehachapi, pro se.

Carole Hann, Diane C. Yu, Richard J. Zanassi, Erica Tabachnick, Office of General Counsel, State Bar of California, San Francisco, for respondent.

THE COURT:

We review the augmented report and recommendations of the Review Department of the State Bar Court of California (review department) that John Elbert Crooks's (Crooks) violation of 18 United States Code section 371 be deemed to have involved moral turpitude and that Crooks be disbarred from the practice of law. After reviewing the record and Crooks's contentions, we adopt the recommendation of the review department.

I. FACTS AND PROCEEDINGS BELOW

Crooks was admitted to the practice of law in California in 1933. On June 14, 1984, Crooks was convicted in the United States District Court for the Central District of California of conspiracy to defraud the United States (18 U.S.C. § 371). On July 30, 1984, Crooks was sentenced to two years' imprisonment for this offense. Crooks appealed and on November 25, 1986, the Ninth Circuit Court of Appeals (Canby, J.) affirmed Crooks's conviction. (United States v. Crooks (9th Cir.1986) 804 F.2d 1441.) On August 26, 1987, Crooks's petition for rehearing was denied. (U.S. v. Crooks (9th Cir.1987) 826 F.2d 4.)

The subject of the conspiracy was a tax-shelter investment scheme designed by Crooks's coconspirator, Attorney Joseph R. Laird, Jr. (Laird). Under the scheme, prospective investors were solicited to invest funds and encouraged thereafter to claim tax deductions in amounts several times the amount of their invested funds. According to Crooks, a total of 10,000 prospective investors were solicited. Over 3,700 investors became involved in a total of 221 different limited partnerships and, at peak, well over $39 million was invested.

The investors were led to believe that they were entitled to over $105 million in tax deductions because the partnerships would make advance mineral royalty payments which would be tax deductible. Such deductions were fraudulent, however, because the payments to support such deductions were never made; various shell entities formed by Crooks and Laird never had any funds other than the investors' funds. To conceal the fact that the advance mineral royalty payments were not really being made, these shell entities were created to generate large numbers of cancelled checks representing purported loans and purported tax deductible payments simultaneously. All these checks cleared the bank because they offset each other. Thus, the claimed deductions lacked economic substance.

Crooks helped to set up two sham Nevada partnerships to be used in the check swapping scheme designed by Laird. Crooks knew that at least one of these partnerships was a mere conduit of funds. Crooks also did the paperwork to establish, and was a shareholder of, certain other sham entities which were falsely represented to investors as having independently agreed to make loans to some of the partnerships involved in the scheme.

Crooks signed tax opinion letters prepared by Laird for each of the limited partnerships. He thereby gave the impression that he, as an independent attorney not otherwise connected with the tax shelter scheme, had prepared the letters and affirmed their contents. Crooks denies that these tax opinion letters enticed prospective investors. However, he never suggested to Laird that facts additional to those contained in the letters, such as would have exposed the sham nature of the putative deductible transactions, be disclosed to potential investors.

A November 12, 1976, tax opinion letter, which Crooks signed, stated that a D.W. Pennington, Inc., was an independent, unrelated third party and that another company, Dynarad, Inc., was a public company not owned by the general partners in the tax shelter scheme. Crooks knew that these statements were untrue, that D.W. Pennington was Laird's uncle, and that both companies were completely under Crooks denies he was involved in making sales of partnership interests. The record, however, suggests otherwise. Crooks solicited the sale of partnership interests among employees of Cal Am Corporation, one of the companies which Laird had set up to promote his tax shelter scheme. One of those Crooks solicited was Art Serxner, head of the Cal Am Corporation national sales office. Crooks also solicited Dan Jackson to invest in the Sun River Ranch, Inc., a Washington corporation controlled by Cal Am Corporation. In the sale of partnership interests, Crooks made material misrepresentations, and knowingly and wilfully failed to disclose material facts which were known to him.

[800 P.2d 901] Laird's control. Furthermore, to create the impression that D.W. Pennington, Inc., had made certain loans which had in fact not been made, bank accounts were opened and checks simultaneously deposited to create a check swapping circle among D.W. Pennington, Inc., the limited partnerships, and the purported payee of the alleged tax deductible payments. When he signed the November 12, 1976, tax opinion letter, Crooks knew all the relevant details of the financing scheme involving D.W. Pennington, Inc.

When a mailgram was received from the Securities Exchange Commission in December 1976 ordering Cal Am Corporation to stop selling the limited partnership interests, Crooks met with Laird. Laird decided to hide the mailgram under some papers on his secretary's desk until the following Monday morning of the new year, so that in the interim he and Crooks could continue with the sale and processing of limited partnership interests.

In 1976, Crooks received a bonus of $100,000 plus a $5,000 per month retainer for his participation in the tax shelter scheme. Crooks maintains that these funds were received in payment for legitimate legal services rendered to Laird.

Crooks admits he was not under Laird's control or subservient to him; thus, his actions in furtherance of the conspiracy were voluntary.

On March 15, 1989, pursuant to our conviction referral order of September 11, 1985, a hearing panel of the State Bar Court (hearing panel) issued an augmented report and recommendations. The conclusion of the report, on the basis of evidentiary hearings, was that the facts and circumstances surrounding Crooks's conspiracy conviction involved moral turpitude. The hearing panel recommended that Crooks be disbarred. The hearing panel's report was unanimously adopted by the review department (Referee Carlin not participating) on September 14, 1989.

Neither the hearing panel nor the review department found any mitigating circumstances surrounding Crooks's conviction for conspiracy. As aggravating circumstances, both the hearing panel and the review department noted that: (1) in October 1970 we publicly reproved Crooks for wilfully misappropriating to his own use $790.30 which he had been holding in trust (Crooks v. State Bar (1970) 3 Cal.3d 346, 90 Cal.Rptr. 600, 475 P.2d 872) and (2) there was no evidence that Crooks recognized that the conduct which led to his conspiracy conviction was wrong or that he had remorse for this misconduct, which was surrounded by bad faith, dishonesty, and concealment.

Crooks filed objections to the augmented report and recommendations of the State Bar on March 2, 1990.

II. DISCUSSION

The record of Crooks's conviction is conclusive evidence that he is guilty of the crime of conspiracy to defraud the United States. (Bus. & Prof.Code, § 6101, subd. (a).) Conviction of a felony or a misdemeanor involving moral turpitude constitutes a cause for disbarment or suspension of an attorney. (Bus. & Prof.Code, § 6101.) Furthermore, standard 3.2 of the Standards for Attorney Sanctions for Professional Misconduct (Rules Proc. of State Bar, div. V; all further references to standards are to this source) provides that disbarment may be warranted when an attorney The determination of the hearing panel that Crooks's conduct involved moral turpitude is entitled to great weight. (In re Kreamer (1975) 14 Cal.3d 524, 532, fn. 5, 121 Cal.Rptr. 600, 535 P.2d 728.) In addition, while we must exercise independent judgment in determining the appropriate level of discipline to be imposed in any particular case (Greenbaum v. State Bar (1987) 43 Cal.3d 543, 550, 237 Cal.Rptr. 168, 736 P.2d 754), we give great weight to the disciplinary recommendation--in this case, disbarment--of the review department. (In re Severo (1986) 41 Cal.3d 493, 500, 224 Cal.Rptr. 106, 714 P.2d 1244.) Ultimately, Crooks bears the burden of showing that the review department's recommendation is erroneous or unlawful. (Bus. & Prof.Code, § 6083, subd. (c); Weber v. State Bar (1988) 47 Cal.3d 492, 501, 253 Cal.Rptr. 573, 764 P.2d 701.)

[800 P.2d 902] is convicted of a crime which involves moral turpitude. ¹

Crooks raises a number of procedural and substantive objections to the report and recommendations of the State Bar.

First, Crooks complains that both he and his wife, for whom he is the sole caregiver, are in very poor health. For this reason, he claims he was unable to properly research and prepare his petition to this court. Crooks notes that on February 7, 1990, we returned to him, unfiled, his request that we provide him an attorney by appointment and that we extend the deadline for filing his petition.

While we sympathize with Crooks's personal burdens, they are not grounds for finding that the proceedings in his case have been fundamentally unfair. Crooks's only due process entitlement is to a fair hearing overall. (Walker v. State Bar (1989) 49 Cal.3d 1107, 1115-1116, 264 Cal.Rptr. 825, 783 P.2d 184.) Attorneys who face disciplinary proceedings have no constitutional right to the assistance of counsel. (Ibid.) Accordingly, this court's letter of February 7, 1990...